Different Types of Bank Check Fraud

Last year Utah saw one of the biggest identity theft breaches in US history when hacker stole near 780,000 medicaid records. With threats like these looming, it’s difficult for any business or company to keep checkbooks or order them in their workplace because of check fraud.

Both the business and the consumer will be affected since the illegal check is not even real. Forging or creating fraudulent checks start with stealing financial documents. If a criminal gets hold of a checkbook stock or even an old check he can easily manipulate the image via computer editing and have it passed off as real. It is important for businesses to store checks without any financial information printed on them so that if they are stolen, your bank account information will not be compromised.

Forgery can come in the form of a stolen check. Besides copying somebody’s signature it’s also considered forgery to issue a check without proper authorization. Criminals might also use false identification just to be able to make an exchange at the bank.

Paperhanging is something that people do with closed accounts. They might pay, re-order or purposely write checks based on closed accounts. It’s considered bank check fraud because the recipients of the check won’t know that it’s an invalid check until they find out at the bank. It’s basically cheating on another person and it’s considered illegal.

Check kitting is a type of loophole in most banking systems. Some criminals will open accounts at more than one bank. When the bank gives out available funds during “float time” the criminal would simply create inaccurate checks. This is like paperhanging but may be harder to notice because the damage is spread across multiple banks.

The most common of all types of bank check fraud is counterfeiting and alteration. Criminals will fabricate a check by means of a scanner, a specific type of software and high-grade laser printer. Checks can be altered too with the use of chemicals like acetone. Liquids like this can erase handwriting and some printed information on checks. Criminals can either change the written amount or date on an old check.

Many banks suffer greatly from these types of scams, especially business owners. The hassle of having to report the issue brings more expenses and takes up more time when you could have been working, or better yet, taking a break at home. To avoid fraud, focus on investing in check stock which does not have pre-printed account information, or use accounts payable automation. To learn more about check fraud click here

San Juan Record

49 South Main St
PO Box 879
Monticello, UT 84535

Phone: 435.587.2277
Fax: 435.587.3377
Open 8 a.m. to 5 p.m. Monday through Friday

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